Welfare car program to be audited over 'lemon' allegations

November 18, 2003

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Lawmakers voted Monday to audit and investigate the West Virginia Wheels-to-Work program.The program spent $24 million over three years to lease cars to welfare recipients so they could work or go to school. But during interim meetings Monday, several legislators questioned whether the money was spent wisely.House Education Chairman Jerry Mezzatesta, D-Hampshire, proposed the legislative investigation and audit during a meeting of the Commission on Workforce Investment for Economic Development.Committee chairman Sen. John Unger, D-Berkeley, promised to keep a "very intimate relationship" with state officials who run the program until his questions are answered."In Dante's hell, there's a special place for those who steal from the poor," Unger said. "If we're stealing from the poor, we need to resolve it and stop it."Four agencies ran the Wheels program for the state. They bought used cars from dealers and paid for insurance and repairs, while program participants paid for the car in 24 monthly installments.More than a dozen program participants have said the program gave them unsafe cars. Seat belts didn't latch, steering wheels fell into laps, and mufflers fell off cars.A Southern West Virginia woman leased seven cars before she got one she could drive, according to a previous state audit.Another woman's engine caught on fire on the way home from the mechanic.Also, officials at two agencies set up deals with used-car dealers who sold, repaired and towed the same cars, giving them an incentive to sell lemons.For more than an hour Monday, legislators grilled Fred Boothe, the Department of Health and Human Resources official responsible for the program.
Boothe said that all the cars went through a safety check and had to pass state inspection. He blamed some of the car problems on program participants."If you go up a holler and drag off a muffler," it's not the program's fault, he said."Are there going to be problems with maintenance over two years? Sure," he said. "We tend to buy the least expensive car that is roadworthy."Boothe said the program had 3,036 participants, all of whom were placed in employment or training. About one of every four cars was repossessed.

Delegate Samuel Cann, D-Harrison, asked how many participants were able to keep their jobs. Booth said he didn't have that information, but local welfare workers keep track of each participant."We ought to quit the whole program if we don't know if it works," Cann said. "We want to see it be successful — we just want to know how many stay on the job."

Boothe also talked about an audit that his agency did of one program, Community Action of South Eastern West Virginia (CASE). That audit found:

CASE officials paid one used-car dealer, Nathan Belcher, full retail prices for vehicles, an almost unheard-of practice in the used-car world. Program rules said they should pay only the trade-in value.

Vehicles were sold back to Belcher at a fraction of the original purchase price. In December 2001, for instance, Belcher bought 52 cars from CASE for $5,000. A year before, CASE spent $118,000 for the vehicles. CASE bought 22 of those cars from Belcher.

The quality of cars was "extremely poor," the necessity of repairs "unreasonable."

After the audit, the agency continued to receive hundreds of thousands of dollars from the state.Unger asked, "If they're doing it, what do you say? Bad practice, shame on you?"Boothe replied that state officials put CASE on a "corrective action plan" and determined that nothing illegal happened. He also said that he didn't know of any similar practices in other agencies.Last summer, Boothe and other state officials quietly scrapped the Wheels lease-to-own program in favor of a new, donated-car program. The model for the program, he said, was Good News Mountaineer Garage.But the Department of Health and Human Resources recently awarded the $1 million grant to Morgantown-based Human Resources Development Foundation, an offshoot of the state AFL-CIO. Human Resources Development Foundation was one of the four programs that ran the former Wheels program.Sen. Brooks McCabe, D-Kanawha, asked why HRDF got the grant, when the pilot program was a success and the lease program was not.Boothe said that HRDF ran a good program, according to his staff. A recent program audit found only eight important problems, as opposed to 20 for CASE.Also, that agency's proposal was more than $400,000 cheaper than Good News Mountaineer Garage, which says that HRDF is not spending enough to run an effective program.Earlier this week, Sen. Larry Rowe, D-Kanawha, asked state Secretary of Health and Human Resources Paul Nusbaum for a review of that decision.Also, HRDF gave legislators a report defending its program. It said the agency carefully monitored expenditures to make sure repair costs were reasonable.The report says the agency repossessed 161 of the 610 vehicles it leased, or about one in four. The state Department of Health and Human Resources released a report earlier this month that said 227 vehicles were repossessed.AFL-CIO President Jim Bowen attended the interim meeting where the Wheels program was discussed, but was unable to speak because the committee ran out of time. He is scheduled to speak at next month's interim meeting.To contact staff writers Scott Finn and Eric Eyre, use e-mail or call 357-4323.